Product Life Cycle

(PLC)

By: Amanda Walcker

 Topics
The Four Major Stages:
 Market Introduction
 Market Growth
 Market Maturity

Sales Decline
Graph
Example
Pros and Cons
 Stage 1: Market Introduction
Sales are low as the new idea is first introduced
to the market.
Customers may not be aware of the product’s
benefits and features and may not be aware of
the product itself.
Most companies experience losses during the
market introduction stage.

A lot of money is spent on promotion and product
development to build product awareness.

Promotion is aimed at innovators and early adopters.
Pricing:
 Low penetration pricing
 High skim pricing
 Stage 2: Market Growth
Rapid growth in sales and profits
 More product awareness
Competitors see the opportunity and enter
the market.
 Some competitors will copy the product or
may try to make it better or more appealing to
other target markets.
 The new entries result in more product
variety.
Additional features and support services
may be added to:
 Combat competition
 Retain customers

Promotion is aimed at a broader audience.

More distribution channels are

established.
 Stage 3: Market Maturity
Most common stage in the cycle.
Sales begin to level off.
The competition gets tougher as more
competitors have entered the market.
 Increased competition creates a downward
movement in prices.
Industry profits are largest, but it is also
when industry profits begin to decline.
Promotion is targeted to create brand
differentiation.
 Stage 4: Sales Decline
Sales continue to decline.
 Shrinking market
New products replace the old.
Firms will often try to use extension
strategies.
Companies may be able to keep some
sales by appealing to their most loyal
customers.
When in the decline stage, a firm may:

 Maintain: enhance the product by finding new

uses or by adding new features.


Harvest: reduce costs and continue to offer
the product to a targeted niche.

 Discontinue: sell the product to another firm,

or liquidate inventory.
Example: New Flavor of Pepsi
Stage 1: Market Introduction

Pepsi bottles the new flavored product and
places it on the market for consumers.
 Pepsi also spends a lot of money advertising
the new flavor creating awareness.

Stage 2: Market Growth

 Customers like the flavor and begin to make
routine purchases.

Coke introduces their competing flavor.
Stage 3: Market Maturity
 More competitors enter the market taking
some of Pepsi’s profits.

Stage 4: Sales Decline


Customers have moved on to the next new
flavor.
 Some loyal fans stay behind.
 Pros

The product life cycle is a useful model when

deciding possible stages of a product or
service.

Useful to help demonstrate how marketing

strategies can vary at different stages of a
product's life.
 Promotion
 Pricing Strategies
 Cons

Tends to be backward looking

 We only know which stage we have been in
after it has been completed.

Only looks at a single product when most

firms have many products.

Determinism